By Peter Osalor
Because of Nigeria’s strategic location and the abundance of its natural resources, infrastructure development in the country has Pan_African relevance. The human capital of 150 million that makes Nigeria the most populous African nation is a workforce of uncharted economical potential.
The country’s thriving informal sector, estimated to be as high as 75% of the total economy, also conceals tremendous possibilities for inclusive growth. Rapid SME development has hence been the mainstay of successive governments since the reinstatement of civilian rule in 1999. Nigeria’s ability to kick_start an enterprise revolution that will fundamentally alter its macroeconomic imbalances remains the quintessential challenge of its 2020 goal.
Infrastructure development is clearly going to be the first building block in this endeavour, and ground realities are pretty harsh as present conditions go. For Nigeria, the larger impact of infrastructure deficits is the high cost of doing business, for large corporations and small enterprises alike. Lawmakers need to draw up a comprehensive blueprint to reverse this trend in a time_bound manner.
The following are two key aspects in this consideration:
“The whole of Western Africa receives very nominal foreign private investment in infrastructure due to a slew of reasons ranging from high foreign exchange risk to low credit worthiness. The regions subdued ability to raise debt and inclination towards infrastructure sectors with limited regulatory intervention are further obstacles. Nigeria needs to lead the way in enhancing access to equity debt as a means of attracting projects with viable private participation.
“The ability of local finance markets to fund infrastructure projects is very low across the continent. Local long_term local financing is almost non-existent except in South Africa, which has been successful in developing an indigenous capital market for consistent funding on convenient terms. The absence of similar capacity in the rest of Africa means most of it is dependent entirely on grants_in_aid and soft loans from international development agencies.
For developing African economies, increasing foreign investment on infrastructure while simultaneously developing avenues for credible local finance is a daunting task.
The current Nigerian government acknowledges the challenge by listing infrastructure development as a cornerstone component for the realisation of the 2020 goals as well as the Millennium Development targets. Some recent initiatives in this connection include the setting up of a federal mortgage bank, a housing authority and a national road maintenance agency.
That infrastructure will be the prime driver of all socio_economic development in Africa is given. What remain unclear are the ways and means that individual nations employ, and the ground effectiveness of such measures beyond official statistics and proclamations. Nigeria has the unique opportunity not only to reverse decades of economic stagnation but also to hold up an effective model for accelerated ambition gathers wider significance because it is bound to have a gradual spill_over effect on its immediate geography.
Unbeknownst to itself, Nigeria holds the ticket to achieving even greater goals that it has currently set itself up to; and not just for itself but the whole of Africa.